“What risk? You are a professional, not a casino!”
Next on the list of things we all should have been taught but weren’t: figuring out who bears the risk.
The basics: pretending like things never go wrong in a job or project only makes the damage bigger in the end. That’s the “risk” part. The “who bears” part additionally determines whose problem it is when (not “if”) they go wrong.
There are 3 fairly simple steps:
- Start the list of risks with
what “delivery” means to both parties and who pays for any failures. - Add risks that apply: currency fluctuations, payment delays, budget overruns, tech failures, regulatory issues, client changing their mind about scope, IP infringement, brand damage, client dissatisfaction, natural disasters, and security breaches. Now add those that are specific to your industry/location. Starting to feel casino-y yet?
- Have your lawyer sort it out in the contract you offer. Additionally, for each risk on your new list, note down who is paying for any damage. If it was never mentioned so far in your relationship with this client, it’s probably you.
NOTE: it may seem ideal to make the client take all of the risks, but it’s NOT. That kind of a deal is usually called “employment” and the client typically gets to have at least 9/10 of the value you create as compensation. The more risks you can take on, the more of that value you get to keep.